At a conference held in Manila in 2013, the city of San Fernando presented the results of its work with the Institute for Solidarity in Asia (ISA), CIPE’s longtime public governance partner in the Philippines. The mayor of this bustling city of 250,000 in central Luzon explained that the city had reduced the poverty rate by nearly 70 percent since partnering with ISA, lowering the percentage of the city population living in abject poverty to 2 percent (compared to a national average nearly six times that). By 2013, more than 50 percent of San Fernando’s population were classified as “middle class”, up from 38 percent in 2005 (the national average is 19 percent). Moreover, the city had built an additional 6,300 housing units, made record investments in education, and private investment in the city was booming.
The mayor proudly boasted that the city’s motto of “Kaya Natin ‘To (Yes We Can)” was increasingly true.
San Fernando is one of a growing number of cases of remarkable improvements in public governance in the Philippines as a result of undertaking ISA’s Performance Governance System (PGS), a rigorous accreditation program that requires participating organizations to reform and strengthen their governance practices with the goal of improving organizational performance, financial transparency, and political accountability. Since 2004, CIPE has worked with ISA to develop and promote the program for local governments across the Philippines.
When a city adopts the PGS program, city officials work with a broad-based community group to design specific public policy goals, an action plan to accomplish them, and performance metrics by which to measure progress. The program requires a city to implement a series of reforms that fundamentally transform its policymaking processes and bureaucratic structures, and its staff must complete a rigorous training regimen. ISA recruited an initial group of eight cities to adopt the PGS, and their success, and the successes of nearly 40 additional local governments that adopted the program over the years, led CIPE and ISA to apply this methodology to central government agencies beginning in 2010 and state-owned companies in 2013.
By institutionalizing community input in local policymaking processes and by making public agencies more transparent and accountable, this project is strengthening the incentives of public officials to improve the quality and reliability of public services.
The Performance Governance System – Initial Focus on Local Government
The Performance Governance System is a rigorous accreditation program modeled after a management methodology developed at Harvard Business School. Initially conceived as a tool for corporations, CIPE and ISA adapted this conceptual approach to local governments in the Philippines.
As mentioned above, when a city adopts the PGS, government officials and a community consultative group design the city’s “scorecard,” which consists of specific public policy goals, an action plan to accomplish them, and performance metrics by which to measure progress. Requiring formal adoption by a city’s chief executive and legislative body, a city’s scorecard becomes a locally-owned initiative.
To guide and monitor a city’s progress on institutionalizing the PGS into city planning, ISA laid out a four-stage “pathway”:
- The first stage is for the city to set up its community consultative group and corresponding city planning team, and for these bodies to jointly form a long-term strategic plan, or “scorecard.”
- Second, the city’s bureaucratic departments, activities, and budget allocations are aligned with the long-term objectives laid out in the city’s PGS scorecard.
- The third stages is considered achieved when the city is recognized by ISA to be performing in relation to its specified targets, to have an office in charge of strategy execution, and to be using the scorecard as the framework for its public reporting.
- Finally, ISA certifies a city as having institutionalized the PGS when the city demonstrates dramatic, sustainable achievement in one or more of the areas specified in the city’s PGS scorecard.
As CIPE’s partnership with ISA unfolded, new elements were added to the system, such as a Local Economic Development (LED) toolkit. This toolkit helps local policymakers target the institutional factors that drive local economies.
In many (if not most) emerging markets around the world, local governments take a “transactional” approach to local economic development, such as giving customized tax holidays and regulatory abatements to incentivize individual companies to invest in their city. The LED toolkit takes an “institutional” approach to facilitating inclusive economic growth by seeking to change the policy and sociopolitical environment in a given locality in ways that make that locality an enticing investment destination. Specifically, this toolkit helps localities develop and implement public policy aimed at local economic development by breaking down the broad concept of LED into five distinct and tangible components:
- Investment in people (schools, public health, etc.)
- Investment in physical infrastructure
- Development of the SME sector
- Attraction of private/commercial investment
- Improved local competitiveness (streamlined processing of business licenses, simplified and predictable regulatory code, etc.)
To begin this process, ISA helps a city conduct a “regional competitiveness study” to learn how its local policy environment compares with neighboring jurisdictions. City officials then incorporate this five-point model into their overall PGS program.
Breakthrough Results at the Local Level
The city of San Fernando, Pampanga was among the first localities to implement a PGS initiative. It took nearly five years for the city to complete the pathway. In addition to the accomplishments outlined above, the volume of resources mobilized through public-private partnerships in San Fernando rose from 19 million Philippine pesos (PHP) to nearly 150 million PHP, and the length of time required to register a business fell from two weeks to two hours. As a result, the city was able to double its spending on elementary education. In February 2009, San Fernando received the Galing Pook (“Great Place”) Award from President Gloria Arroyo. The city was also named the “Most Business-Friendly City in North Luzon.”
Balanga, a city of 150,000 on the Bataan Peninsula, used frameworks introduced by the PGS and ISA public financial management training to develop a comprehensive urban development plan aimed at making Balanga the country’s leading “university town.” Balanga’s community consultative group identified the five universities located within the city as unique resources on which the city should capitalize. The city invested in extensive pedestrian infrastructure to link the various campuses to each other, and leased public land adjacent to the campuses for private investments in hotels and retail. The entire city was re-zoned to attract investments targeted at the university populations. Improved public services include a redeveloped public market and the construction of the city’s first-ever public library.
The City Administrator of Balanga said the PGS made the city government “more transparent in the provision of public services.” The mayor explained that “ISA and the PGS help us make capital investments in a more strategic way, geared towards accomplishing real goals, as opposed to the ad hoc nature of city spending prior to the PGS. ISA also taught us to develop performance metrics so that we can empirically measure progress, and how to mobilize public-private partnerships.”
Masbate City, a small coastal town in the Bicol region, adopted ISA’s local government reform program in 2008 with the primary aim of developing the local economy. This is a very common aim cited by cities that adopt the PGS. Masbate’s local community consultative group identified the city’s seaside tourism potential as a long-term driver of local economic development. To cultivate local tourism industries, the city sought to become a “marine sanctuary.” Due in large part to ISA training for city staff, Masbate was able to improve management of its coastal resources to such an extent that the locality was accredited as a marine sanctuary by the Department of Environment and Natural Resources. This accomplishment is highlighted in a marketing campaign promoting tourism in the city.
Application to Central Government Agencies
The exceptional impact of the PGS on the quality of local government performance, and on the improved transparency and inclusivity of local governance, prompted the Office of the President to reach out to ISA in 2010 to request that the PGS methodology be applied to central government agencies. An initial group of six agencies adopted the PGS, five of which were cabinet ministries.
In congressional oversight hearings in early 2012, the appropriations committees of both the Philippine Senate and House of Representatives lauded the Department of Social Welfare and Development, the Department of Health and Department of Public Works and Highways as the government’s top-performing cabinet departments. All three use the PGS as their management system. Both committees requested quarterly updates from each of these departments on their respective PGS pathways.
Within three years, the number of central government agencies working on a PGS pathway reached 26.
Democracy must deliver in three ways. First, the government must produce outputs in the form of social services, security, justice, and so on. Second, the government must facilitate economic growth to improve standards of living. Third, the government must be responsive to public needs and demands. Proper follow-through depends on both an administration that is capable of implementing its policies as well as mechanisms for the public to hold the government accountable for its commitments. CIPE’s ongoing initiative with ISA is making invaluable contributions to the Philippines in each of these areas.
Chairman of the Philippine National Competitiveness Council Guillermo Luz said at an ISA event, “What does the PGS mean for the average Filipino citizen? Two words: savings and quality. For example, progressing through the PGS has improved the ability of government agencies to deliver high quality public works on time and on budget.” Such improvements in public governance help make democracy deliver, and making democracy deliver for citizens is the core of CIPE’s strategy for consolidating democracy in the Philippines.
This case study was published in CIPE’s “Strategies for Policy Reform Volume 3: Case Studies in Achieving Democracy That Delivers Through Better Governance,” click through to download and read more.